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Johnson Controls Raises Dividend

Johnson Controls Inc. (JCI) raised its quarterly dividend payment by 5.6% to 19 cents from 18 cents, paid for the third quarter of the year. The fourth quarter dividend will be applicable to shareholders of record as of December 7. It will be paid on December 28 instead of January due to possible changes in tax laws. According to the company, the dividend hike is mainly based on its financial performance and continued growth.

Johnson Controls stalled its dividend payment increases in 2008 til 2009 due to the global economic recession. After that period, the company raised its dividend by 23.1% to 16 cents for the fourth quarter of 2010 and continued raising it in the succeeding years. Last year, the company raised dividend by 12.5% to 18 cents.

The Zacks #4 Rank (Sell) company reported adjusted earnings per share of 77 cents for the fourth quarter of its fiscal year ended September 30, 2012, ahead of the Zacks Consensus Estimate of 75 cents and up 1.3% from 76 cents a year ago. Earnings were in line with the management's expectation of 0% to 5% growth in the quarter.

Management believed earnings had favorable impacts from the improved profitability in Building Efficiency, Power Solutions and North America Automotive Experience businesses. However, these were offset by weak performance in automotive and buildings markets in Europe.

The company’s revenues for the quarter decreased 3.6% to $10.4 billion. It was marginally lower than the Zacks Consensus Estimate of $10.8 billion. However, excluding the impact of foreign exchange, revenues grew by 1% in the quarter.

The company has not provided any specific guidance for fiscal 2013. It expects that earnings in the first half of fiscal 2013 will be lower than the year ago period due to weak end markets and adverse effects of foreign currency. However, it anticipates earnings will be higher in the second half of fiscal 2013 compared to the year-ago period, driven by a positive impact from restructuring activities. Meanwhile, earnings in fiscal 2013 are expected to be flat or a bit higher than fiscal 2012.

Johnson Controls is a supplier of automotive interiors, batteries, and other control equipment. Its main competitors include Magna International Inc. (MGA) in the Automotive Experience segment, Honeywell International Inc. (HON) in the Building Efficiency segment and Exide Technologies (XIDE) in the Power Solutions segment.